Consumer Alert: Caution before co-signing on a student loan

(WOIO) -

Are you trying to figure out how to pay for your child's college tuition? If you're thinking about co-signing on a student loan, there's information that you should know before you sign on the dotted line.

A whopping two-thirds of undergrads now graduate with student loan debt, totaling $1 trillion waiting to be paid back. For the first time ever the student loan default rate now exceeds credit card delinquency rate.

The average interest rate at graduation has increased and unemployment rate is high. The amount of debt increasing each year making makes it even more difficult for students to be able to afford their student loans.

Nowadays if loans are private, more often than not there's more than one signature on the bottom.

"More than 90 percent of new borrowers have a cosigner on their student loan, that's up from less than half before the credit crisis," According to Mark Kantrowitz, of FinAid.org.

So what options do you have if your child defaults and you cosigned? Attorney Ann Margaret Carrozza suggests you contact the lender immediately and ask for an interest rate adjustment deferment. This gives you a temporary reprieve from the payments where the interest does not accumulate or forbearance where the payments are temporarily suspended but the interest still accumulates. No matter what, a default can put a lot of stress on a family.

Experts say families should be sure they've exhausted all federal loan possibilities before taking out a private student loan.

It's usually difficult to get student loans dismissed in bankruptcy court.